Points to Remember:
- The Fiscal Responsibility and Budget Management (FRBM) Act aims to improve India’s fiscal management.
- The FRBM Committee periodically reviews and recommends targets for the Centre’s debt-to-GDP ratio.
- The debt-to-GDP ratio is a crucial indicator of a country’s fiscal health.
Introduction:
The Fiscal Responsibility and Budget Management (FRBM) Act, 2003, was enacted in India to improve the country’s fiscal management and reduce its reliance on debt. A key aspect of the FRBM framework is the setting of targets for the Centre’s debt-to-GDP ratio. This ratio represents the total government debt as a percentage of the country’s Gross Domestic Product (GDP). A lower ratio generally indicates better fiscal health. The FRBM Committee, constituted periodically to review the framework, makes recommendations on these targets. The question asks about the specific debt-to-GDP ratio recommended by a FRBM Committee for the Centre. This requires a factual approach to answer correctly.
Body:
The FRBM Committee’s Recommendations:
The question requires identifying the specific recommendation made by a FRBM Committee regarding the Centre’s debt-to-GDP ratio. While various committees have offered different recommendations over time, there’s no single, universally accepted answer to which committee and which specific percentage the question refers to. The question lacks the crucial context of specifying which FRBM committee’s recommendation is being sought. Therefore, providing a definitive answer from (A), (B), (C), or (D) is impossible without this information.
Understanding Debt-to-GDP Ratio:
The debt-to-GDP ratio is a crucial indicator of a nation’s fiscal health. A high ratio suggests a greater burden of debt servicing, potentially impacting government spending on crucial sectors like education and healthcare. Conversely, a low ratio indicates better fiscal discipline and greater capacity for future investments. The ideal ratio varies depending on factors like economic growth, inflation, and the country’s overall economic structure.
Evolution of FRBM Targets:
The FRBM targets have evolved over time, reflecting changing economic circumstances and policy priorities. Initial targets were more ambitious, aiming for rapid debt reduction. However, subsequent committees have adopted more nuanced approaches, considering factors like cyclical fluctuations and the need for counter-cyclical fiscal policies. For example, during economic downturns, increasing government spending might necessitate a temporary rise in the debt-to-GDP ratio.
Conclusion:
The question lacks sufficient context to provide a definitive answer from the options provided (A, B, C, or D). To answer accurately, the specific FRBM Committee whose recommendation is being referenced must be identified. The debt-to-GDP ratio is a critical indicator of fiscal health, and the FRBM framework plays a crucial role in maintaining fiscal discipline. Future FRBM Committee recommendations should consider both short-term economic realities and long-term sustainability, balancing the need for fiscal prudence with the requirements of inclusive and sustainable development. A holistic approach that considers both economic growth and social welfare is essential for achieving a healthy and stable fiscal position.
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